Builders increased construction of single and multi-family homes in April which made U.S. housing starts rise more than anticipated.
The Commerce Department reported on Tuesday that groundbreaking had increased 6.6% to an adjusted annual pace of 1.17 million units. For comparison, economists had predicted housing starts to be at a 1.13 million unit pace for last month.
This combined with strong April retail sales supports the view that the economy is gaining momentum early on in the second quarter after a slow first. The strong labor market is opening up more employment opportunities which is sustaining the housing market by boosting household formation.
The largest segment of the market is single family housing.
Overall, this increased 3.3% in April to a 778,000 unit pace.
Single family housing starts in the South soared 9% which is the highest since December 2007.
Single family housing starts in the Midwest jumped 12.8%.
Housing starts for multi-family units rose 13.9%, up to a 394,000 unit pace.
In April building permits jumped 3.6%, a 1.12 million unit rate.
Single family home construction permits strengthened by 1.5%, and multi-family building permits were up by an astounding 8%.